Small lenders that cleared cheques via Yes Bank stuck

Mayur Shetty | TNN

Mumbai: Yes Bank’s disconnect from various payments and fund transfer networks is affecting over 50 small banks, including cooperative, foreign and regional rural banks.

With the moratorium shutting Yes Bank from the cheque clearing and real time gross settlement (

RTGS

) systems, several other banks that depend on the troubled private lender are also shut out.

Yes Bank provides sub-member bank services to cooperative, private and foreign banks whose operations are too small to invest in a direct membership. The services include facilities such as RBI clearing house, RTGS, national electronic funds transfer (

NEFT

), the national financial switch (for

ATMs

).

Among the foreign banks that the troubled Yes Bank was servicing is

Doha Bank

. Several district central cooperative banks are also customers of Yes Bank.

The affected banks include 13 cooperative banks and regional rural banks in the northeast where banking penetration is relatively lower. Cheques of these banks cannot be presented for clearing as lenders have issued instructions that those that are sub-members of the clearing system through Yes Bank’s membership will not be able to get their cheques to clear.

“Yes Bank is unlike the small cooperative banks that have been regulatory placed under moratorium by the Reserve Bank of India (RBI). Besides being a large bank, it is also a financial services infrastructure provider for other banks,” said a banker.

Earlier this week, the fintech world was thrown into a disarray as many startups were blocked form UPI payments as they were using application programming interfaces (APIs) provided by Yes Bank.

When the RBI placed Yes Bank under moratorium last week, fintechs providing third-party UPI services like PhonePe were hit. Yes Bank was the sole partner to 20 third-party players providing UPI services. It also provided API banking services to enable straight-through processing of transactions for businesses.Also, Yes Bank has 92,065 point of sale (PoS) terminals (card swipe machines), which cannot be used due to the moratorium. Thus, merchants that have only Yes Bank

PoS

machines have not been able to accept card payments.


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